Shares in BAE Systems nudged up on Wednesday after the defence giant bagged a $198 million (£150 million) tank contract with the US Marine Corps.

The deal will see BAE deliver an initial 30 "amphibious combat vehicles" with options for a total of 204 tanks, which could be worth up to $1.2 billion (£909 million).

"We are well positioned and ready to build the future of amphibious fighting vehicles for the Marine Corps, having already produced 16 prototypes," said Dean Medland, vice president and general manager at BAE Systems.

BAE Systems shares were up more than 1% on the FTSE 100 following the announcement late on Tuesday.

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The new vehicles will be advanced 8x8 open ocean-capable vehicles equipped with a six-cylinder, 700HP engine, which is expected to be a substantial power increase over the current assault amphibious vehicle.

Sandy Morris, equity analyst at Jefferies, said: "We regard it (the contract) as a good, important win for BAE, but not a game-changer, although we acknowledge that up to 700 vehicles might ultimately be procured - potential work that BAE has stated could be worth around $3 billion (£2.3 billion) over a decade."

Earlier this year, it was announced that the UK Government will stump up £900 million for BAE to press ahead with the second phase of construction for four nuclear-armed Dreadnought submarines.